Composition Scheme is voluntary scheme with simpler returns and lesser compliance under GST. A business that needs to mandatorily register under GST because of crossing threshold limit of aggregate turnover can avail benefit of Composition Scheme of GST Act.
- If aggregate turnover of business is up to Rs.1.5 Cr for goods and restaurant services (Rs.75 lacs for special category states) or Rs.50 lacs for other services during a financial year, it can opt for Composition Scheme
- Issue Bill of Supply for sale of goods and services
- Cannot collect GST from its customers on sale of goods or services
- Cannot claim an input tax credit of GST paid on purchase of goods or services
- Pay tax at a fixed rate on its turnover. The tax rate is either 1%, 2%, 5% or 6% based on nature of the business
- File GSTR-4 (Quarterly return) on or before 18th of month from end of a quarter
Read more - What is Composition Scheme under GST?